Decibel's Net Revenue Grew 75% To $52M In 2021, Six Consecutive Quarters Of Positive Adjusted EBITDA

Decibel Cannabis Company Inc. DBCCF DB released its year-end audited financial results for the three and twelve month periods ending December 31, 2021.

Key Financial Highlights – Fiscal Year 2021

• Net revenue of $52 million in 2021, an increase of 75% from 2020.

• Gross profit of $18 million in 2021, an increase of 53% from 2020.

• Positive adjusted EBITDA of $7.4 million in 2021, an increase of 386% from 2020.

"Decibel continues to execute on its strategy to accelerate revenue growth and deliver new, unique and innovative choices to cannabis consumers. The success achieved through 2021 with record market share demonstrates the strength we've created in our brands, and our dedication towards our customers", stated Paul Wilson, CEO of Decibel. "Our momentum has accelerated into 2022, and we are gaining great traction across our products and brands, particularly with our recent infused product launches over late Q4 and first quarter of 2022."

Key Financial Highlights Q4

• Net revenue was $14 million in Q4, an increase of 23% over the comparative 2020 quarter.

• Gross margin was 26% in Q4, compared to 31% in the prior quarter. The decrease in gross margin is attributable to:

  • Permanent impacts include price compression in Qwest Family of Brands' products by approximately 25% and a 4% reduction in retail sales margins due to higher competition.

  • Transitory impacts include a $345 thousand provision for aged inventory, $738 thousand in air freight charges due to supply chain challenges, and $369 thousand of non-cash amortization, and $891 thousand of write downs.

  • Adjusting for the impact of the transitory factors, normalized gross margin would have been 43%.

• The company achieved positive adjusted EBITDA of $1.5 million in Q4, its sixth consecutive quarter of positive adjusted EBITDA and an improvement of 32% from the prior year.

• Cash used in operations was $5.1 million in the fourth quarter.

• On February 1, 2022, the company closed a debt financing with connectFirst Credit Union in respect of $54 million of debt capital over a 5-year term. The company has two facilities that remain undrawn:

  • $12 million additional term debt earmarked for repayment of the company's convertible debentures;

  • $7.5 million accordion to support future growth initiatives, with availability subject to a trailing twelve month funded debt to EBITDA ratio of less than or equal to 4.00:1.00.

Q1 2022 Preliminary Results

The company anticipates for the three-month period ending March 31, 2022:

• Net revenue between $16.5 and $17.5 million, compared to $12.6 million in Q1 2021

• Exiting Q1 2022 with a record 4.0% recreational national market share

Photo by Mackenzie Marco on Unsplash

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